In two recent certificate orders issued on May 20, 2021, the Federal Energy Regulatory Commission (“FERC”) did not assess the significance of the greenhouse gas (“GHG”) emissions of natural gas pipeline projects in terms of their contribution to climate change. This seems to be a step back from a March, 2021 order, which indicated that FERC would consider the significance of natural gas emissions in the context of a certificate involving pipeline replacement facilities, but reflects an unusual last-minute compromise reached during an open meeting in order to gain sufficient votes to approve the certificates.

In voting on the May 20 orders, the Commissioners were split on whether the National Environmental Policy Act (“NEPA”) requires further analysis of the climate significance of the greenhouse gas emissions calculated for the pipeline projects.  A majority of Commissioners compromised by merely providing GHG data for information purposes without determining their significance.

As discussed in a prior post to this blog, in March, 2021, FERC approved a pipeline project certificate in an order that considered “the significance of the project’s GHG emissions and their potential impact on climate change,” and stated that if a project’s GHG emission impacts are significant, they “would be considered along with many other factors when determining whether a project is required by the public convenience and necessity.”  Two recent orders that discussed GHG emissions, however, noted that “analysis of greenhouse gas emissions is offered for informational purposes only, does not inform any part of this order’s holding, and shall not serve as precedent for any future certificate order.”

After an extremely tense debate at its open meeting on May 20th, FERC narrowly approved a Northern Natural Gas project in Minnesota (Docket No.CP20-503) as well as a Tuscarora Gas Transmission project in Nevada (Docket Number CP20-486). The approvals came after a 4-1 vote to accept Commissioner James Danly’s motion to amend the draft orders to make clear FERC was setting no new precedent on its greenhouse gas emission approach in approving the two projects. The Commission then voted 3-2 to approve the certificates. Chairman Glick and Commissioner Clements dissented in part on the grounds that the Commission should have issued an environmental impact statement (“EIS”) to determine the significance of the emissions from these projects and the impact on climate change and thus FERC did not satisfy its duty under the National Environmental Policy Act (“NEPA”).  They added that finding a project’s GHG emissions to be significant is not a “death knell” for that project and FERC may very well conclude that the project’s benefits outweigh even significant adverse impacts and may also order mitigation of adverse impacts.

In the May 20 Northern Natural order, the Commission did provide information concerning the projected downstream emissions from the projects and also compared them to the projected emissions in the United States, but issued an Environmental Assessment (“EA”) instead of an EIS.  The shippers were all local distribution companies and Northern identified a growing demand for energy for industrial and residential uses.  The EA estimates that the maximum potential GHG emissions from operation of the project to be 42,814 metric tons per year of carbon dioxide equivalent (CO2e).  FERC found that construction of this project could potentially increase CO2e emissions based on the 2019 levels by 0.00013% in 2021; in subsequent years, the project operations and downstream combustion of gas transported by the project could potentially increase emissions by 0.016%.[1]  The Commission also considered the state’s targets for reducing emissions and found that the project would represent 13% and 4.5% of Minnesota’s 2025 and 2050 goals, respectively.

Using a similar analysis in the Tuscarora order issued the same day, FERC found that construction of this project could potentially increase CO2e emissions based on the 2019 levels by 0.00001% in 2021; in subsequent years, the project operations and downstream combustion of gas transported by the project could potentially increase emissions by 0.0052%.[2] The emissions from the project would represent 0.83% and 1.08% of Nevada’s 2025 and 2030 GHG inventory goals, respectively.[3]

Again, both orders noted that the analysis of greenhouse gas emissions is offered for information purposes only, does not inform any part of the order’s holding, and shall not serve as precedent for any future order.

[1] FERC found that the annual GHGs from operation of the project, including the downstream combustion of the gas transported by the project, are 925,244 metric tons per year CO2e.  To provide context to the GHG estimate, 5.769 billion metric tons of CO2e were emitted at a national level in 2019 (inclusive of CO2e sources and sinks).  See Northern Natural order at Paragraph 33.

[2] FERC noted that although the national emissions reduction targets expressed in the EPA’s Clean  Power Plan were repealed, EPA, Repeal of the Clean Power Plan; Greenhouse Gas Emissions from Existing Electric Utility Generating Units; Revisions to Emissions Guidelines Implementing Regulations, 84 Fed. Reg. 32,520, 32,522-32 (July 8, 2019), the Paris Climate Accord has been rejoined, Tackling the Climate Crisis at Home and Abroad, 86 Fed. Reg. 7619 (January 27, 2021).  On April 21, 2021, the U.S. announced a goal of reducing its net greenhouse gas emissions by 50% to 52% below 2005 levels in 2030.  Reducing Greenhouse Gases in the United States:  A 2030 Emissions Target (Apr. 21, 2021), https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/United%20States%20of%20America%20First/United%20States%20NDC%20April%2021%202021%20Final.pdfSee Tuscarora order at note 47.

[3] Nevada’s 2005 CO2 emissions were 50.1 million metric tons.  U.S. Energy Information Administration, Energy-Related CO2 Emission Data Tables (Table 1 – State energy-related carbon dioxide emissions by year, unadjusted (1990-2018)), https://www.eia.gov/environment/emissions/state/.  Therefore, FERC considered the 2025 GHG emission target to be 35.972 million metric tons and the 2030 GHG emission target to be 27.555 million metric tons. See Tuscarora order at Paragraph 29.

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Photo of Bud Earley Bud Earley

Bud Earley, a non-lawyer senior advisor, provides analysis and advice on a wide range of federal and state energy regulatory issues, including transaction and rate issues, regional transmission organization (RTO) tariffs and rules, interconnection, retail choice and demand response for electricity customers…

Bud Earley, a non-lawyer senior advisor, provides analysis and advice on a wide range of federal and state energy regulatory issues, including transaction and rate issues, regional transmission organization (RTO) tariffs and rules, interconnection, retail choice and demand response for electricity customers, a natural gas pipelines and hydroelectric facility licenses, and LNG export authorizations.

Working with Covington teams, Mr. Earley has provided expert advice and analysis to investment firms, utilities, independent power producers, project developers, customers, marketers and U.S. and international energy companies,

Prior to joining Covington, Mr. Earley served for over 30 years in various staff positions at the Federal Energy Regulatory Commission (FERC). While at the FERC, Mr. Earley was instrumental in developing and applying policies regarding the transition of the electric utility industry to competition, including policies regarding independent power producers, transmission access, standard generator interconnection procedures, organized electricity markets, mergers and market-based rates.